Animal Spirits: Inflation or Price Gouging?

PRESENTED BY MOBY: Global Liquidity Hits Record Highs of Nearly $175 Trillion

Global liquidity is on the rise. Last week, it slowly climbed $1.13 trillion, pushing the total to an unprecedented $174.67 trillion, marking a new all-time high. This influx of capital into the global financial system indicates an overall increase in access to capital across international markets and an approving nod for risk-on assets, including equities and high-yield bonds.

With more capital available, global markets could see some momentum in stock markets, especially in sectors sensitive to economic growth, which bodes well for the U.S. and global economies as increased liquidity can fuel economic expansion and boost investor confidence.

If global liquidity continues to rise, financial markets may strengthen further, with equities likely continuing their upward trajectory. A persistent increase in liquidity would likely lead to lower borrowing costs and stimulate economic activity, but it would also raise concerns about asset bubbles and financial stability.

The Financial Times predicted this back in January 2024, stating, “Q.T. was partly offset by the Fed’s emergency Bank Term Funding Program that offered loans to banks in the wake of the collapse of Silicon Valley Bank.

Get the full insights into how global liquidity highs might affect the future portfolio management with Moby.

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